CA Trust, Estate & Probate Litigation

CA Trust, Estate & Probate Litigation

Money, family, love, and Wills: Where does it all end for Anna Nicole Smith’s Estate?

Posted in Litigation

Forbes.com reported recently Anna Nicole Smith’s Will contest case may be over…or maybe not so fast.  This mess of a case started nearly 19 years ago after the death of J. Howard Marshall.

A Good Old-Fashioned Will Contest Case—Texas Style

The case started as a Will contest, pitting Anna Nicole Smith against Mr. Marshall’s son, Pierce Marshall.  The Texas Court then ruled in favor of Pierce, leaving Ms. Smith out in the cold.

Bankruptcy Court Interferes by Claiming Interference

Before the Texas court could rule on the Will contest, Anna Nicole Smith filed for Bankruptcy in California, which gave her California Bankruptcy Trustee the power to pursue claims on her behalf.  And pursue they did, with a lawsuit filed in the California Bankruptcy Court directly against Pierce for intentionally interfering with Ms. Smith expected inheritance.  The California Bankruptcy Court ruled in favor of Ms. Smith to the tune of $425 million, later reduced to $90 million.

How is it possible that one court could rule for Ms. Smith while the other ruled against her?  Mainly because the two courts were looking at completely different legal claims.  The Texas court had to decide if the Trust and Will created by Howard prior to his death were valid or not.  While the California Bankruptcy court had to decided if Pierce (the son) intentionally interfered with Ms. Smith receiving an inheritance from her elderly husband, Howard.  One is a lawsuit about the Trust and Will creation, while the other is a lawsuit by Ms. Smith directly against Pierce.

U.S. Supreme Court Cuts Anna off at the Pass

Ultimately, the $90 million judgment was overturned by the U.S. Supreme Court for various legal reasons, leaving Ms. Smith, or rather her estate now that she is deceased, out in the cold once again.

Interestingly, when this entire case started in the California Bankruptcy Court, back in 2002 or so, California law did not recognize the tort of Intentional Interference with an Expected Inheritance (the tort Ms. Smith used to sue Pierce directly).  So how did that claim come to be filed?  The Bankruptcy Court used Texas law to allow the suit against Pierce.  Ultimately, the U.S. Supreme Court decided the Bankruptcy Court overstepped its bounds by ruling in Anna Nicole Smith’s favor, thereby reversing the holding.

The Texas Rodeo is not Over Yet

But all is not lost for Anna’s estate, as there is still an appeal of the Texas Court’s ruling to uphold the Trust and Will.  Somehow that appeal had been put on hold until the Bankruptcy Court finished its business with Anna’s estate.  Now that the Bankruptcy Court is done, the Texas appeal can continue.  But the issues will be limited to the Trust and Will contest, as opposed to the interference claim that was pursued in Bankruptcy Court.

The Moral of the Story

With big money, and complicated family (or rather “family”) dynamics, comes big fights.  And it seems like some estates are destined for a fight no matter what planning is put into place.  Here’s a few lessons I derive from Anna Nicole Smith’s case:

1.  Never Give Up…Intentional Interference Claims.  Just because you cannot bring or win a Trust contest does not mean you have no rights.  The newly recognized claim in California of Intentional Interference with an Inheritance can provide a needed legal remedy to the problem of having someone interfere with your inheritance.  Want to learn more, see my prior post explaining this interesting claim.

2.  No Seriously, Never Give Up…Trust Appeals.  Trust and Will contests are not appealed all that often as compared to many other types of civil cases.  And it is rare in California for an Appellate Court to overturn the decision of the trial court, but appeal is always an option to consider if things don’t go your way at trial.  Plus, it may give you an option to negotiate a settlement if a resolution can be reached between the parties voluntarily.  If not, then at least you get one more shot at winning–albeit a long shot in most cases.

3.  What’s Principal Got to do with it?  Both Anna Nicole Smith and Pierce Marshall died during the 19 years it took to get this far in their Trust dispute.  What may have started over a fight based on principal (they each thought there were right) seems to have stretched the reasonably boundaries of that concept after 19 years.  Principal is important to most people, but as one client of mine said, principal has its outer boundaries.  When the finances of a case no longer make any sense relative to the principal being fought over, you really have to ask why keep going?  After 19 years of litigation and not a penny to show for it on the side of Anna Nicole Smith, is it really worth continuing the fight?  That’s not for me to answer, but at least I can pose the question.

Trustee Exculpation: Letting a California Trustee Off the Hook

Posted in Trustee Breach of Trust, Trustee Removal, Videos

In California, a Settlor can limit the liability of a Trustee by including Trust provisions that make the Trustee liable only in the event he acts recklessly or with gross negligence.  That may not sound significant, but it can have a devastating result when a beneficiary is trying to hold a Trustee accountable for his actions in managing the Trust estate.  In this video, Keith Davidson describes the Trustee exculpation problem.

For our email subscribers, please click on the title link to watch this video on our blog.

Cinderella Story: Problems Caused by Step-Parents in California Trust and Will Cases

Posted in Videos

Step-parents, second marriages, children from prior marriages, these all cause problems in California Trust and Will matters.  Step-parent relationships are already primed for conflict and disagreements in most cases.  And when people don’t like each other, don’t trust each other, and have to rely on each other to determine their respective shares to an inheritance, trouble often follows.  In this video, I discuss some of the problems with step-parent relationships.

For our email subscribers, please click on the title link to view this video on our website.

Albertson & Davidson, LLP
3491 Concours, Ste 201
Ontario, California 91764
909.466.1711 phone
909.354.3460 fax

Will 1 vs. Will 2: How do you bring a competing California Will to the attention of the Court?

Posted in Videos

Competing Wills are at the heart of nearly every Will contest.  A parent creates one Will a long time ago and then a second Will just a few weeks before death, which Will is going to win?  that ultimately depends on the facts, circumstances and evidence of each case.  But understanding how to get your competing Will in front of the Court is an important first step to any Will contest action.

For our email subscribers, please click on the title link to view this video on our website.

Abused Trust Beneficiaries in California Trusts and Wills

Posted in Videos

Abusive Trustees and Executors is an ever increasing problem in California Trust and Will matters.  Despite the many fiduciary duties a Trustee or Executor owes to his or her beneficiaries, abuse occurs.  And when it does occur, it’s up to the beneficiary to take action to stand up for his or her rights.  Partner Stewart R. Albertson discusses the concept of an abused trust beneficiary in this video.

For our email subscribers, please click on the title link to view this video on our website.

Broken Promises: Are Oral Promises to Make a California Trust or Will Enforceable?

Posted in Beneficiary, Litigation, Probate, Probate Court Litigation, Trust Creation, Trustees & Beneficiaries, Will Creation, Wills

Is an oral promise to make a will or trust enforceable under California law? Contrary to what many believe, California law provides for the enforcement of oral promises to make a will or trust.

How does the promise to make a will or trust arise? Generally, a parent orally promises a child, a friend, or a caretaker some or all of their assets once they die, if the child, friend, or caretaker agrees to do something for the parent. The “something” can be anything of value, but usually takes the form of the child, friend, or caretaker taking care of the parent until the parent’s death.

But what if the parent didn’t get around to writing a will or trust that states the child, friend, or caretaker gets some or all of the parent’s assets after they die? Or what if the parent never intended to write a will or trust reflecting the promise to the child, friend, or caretaker? Can the child, friend, or caretaker enforce the now deceased parent’s oral promise to give them assets? The answer is ‘yes’.

California Probate Code section 21700, entitled “Contract to make will” has a provision that allows a person to establish an oral promise by establishing that there was an agreement between the parent and the child, friend, or caretaker that the parent would leave some or all of their assets to the child, friend, or caretaker after they died.

But this is where it gets a bit tricky. The procedural hoops one must jump through to make a an initial claim to enforce an oral promise to make a trust or will under California requires the following:

  • First, one has to pay attention to the applicable statute of limitations. The statute of limitations simply tells us how long we have to file a lawsuit to enforce an oral promise. The applicable statute of limitations for filing a lawsuit to enforce an oral promise to make a will or trust is one year from the date of death of the parent. So if the parent dies on January 1, 2014, then the child, friend, or caregiver would have one year (to December 31, 2014) to file an actual lawsuit to enforce the claim.
  • Second, it gets even trickier. Before one can file a lawsuit based on a broken promise to make a will or trust, one must file a “creditor’s claim” in the estate of the deceased parent. The creditor’s claim is not difficult to complete and file, but if one fails to complete this step, and one year passes from the date of death of the parent, one is very likely barred forever from filing an actual lawsuit to enforce the parent’s promise.
  • Third, it’s still tricky. What if nobody has opened the deceased parent’s estate with the probate court? Can one simply wait until an estate is opened, whether that’s one or two years from now, and then file their creditor’s claim? The answer is very likely ‘no’. The applicable statute of limitations states that to enforce an oral promise to make a will or trust, a lawsuit must be filed within one year of the date of death of the parent. So if the probate estate is not opened, then one needs to file a petition for probate to open the parent’s estate with the probate court, file a creditor’s claim, and then file a lawsuit—all before the one year passes from the parent’s date of death.

Each of these steps must be completed before one can have their day in court to prove a claim based on an oral promise to make a California will or trust. If the one-year statute of limitations (calculated from the deceased parent’s date of death) is blown for any reason, the claim to enforce the oral promise is barred forever from being heard. Thus, it’s very important for one to understand and meet the procedural loopholes required to make a claim to enforce an oral promise.

What’s the Difference? Revocable Trusts vs. Irrevocable Trusts in California

Posted in Videos

These silly little legal terms tend to cause way more confusion that is necessary.  Why can’t we just call them changeable Trusts and unchangeable Trusts?  That’s be way too easy to understand.  Better yet, let’s call them by their official legal names: Inter-Vivos Revocable Trusts and InterVivo-s (or sometimes Testamentary) Irrevocable Trusts.  That should clear things up….  Well, maybe not.  Let’s just explain it in this video, take a look and see what you think.

For our email subscribers, please click on the title link to view this video on our website.

Related Practice Area:
http://www.aldavlaw.com/practice-areas/transactional/estate-planning-and-advanced-estate-planning/ 

Casey Kasem’s Missing Body…Who has the right to control your body after death?

Posted in Abuse & Fraud

Casey Kasem died June 15th, and now his daughter claims that Mr. Kasem’s body is missing (as reported by Jane Caffrey with CNN).  Kasem’s daughters and his wife (Jean Kasem) were engaged in a contentious battle over control of Kasem prior to his death.  Now that Kasem has passed, Jean Kasem has moved Kasem’s body from the mortuary where it was kept without telling his daughters.  So the fight continues on even with who makes funeral arrangements and how the body is ultimately laid to rest

Seems ridiculous, but it happens more often than you may think.  So who has the ultimate control over a person’s body after death?  That can be a tricky question to answer.

Let’s start with California’s Health and Safety code that provides what is supposed to be an orderly way to determine who has control of a decedent’s remains after death.  Under Health and Safety Code Section 7100, the following people, in this order, have the power to control the disposition of remains:

1.  An agent given that power under a Health Care Directive.

2.  The surviving spouse, if competent to make decisions.

3.  The decedent’s child, or a majority of children if the decedent had more than one child.  However, a group of children smaller than the majority can act if they cannot get in contact with the other children.

4.  And then parents, siblings of the decadent, and next of kin, in that order.

The problem comes from a disagreement either between the surviving spouse and the agent under the Health Care Directive, or between multiple children.  I have seen both and it always is an ugly fight.

In Kasem’s case, he had a surviving spouse, but she is not the mother of Kasem’s children, which is a natural breeding ground for conflict in many cases.  Add to that a Health Care Directive that named Kasem’s daughter as agent.  That’s enough to pit spouse against daughter in this mess.  And in some cases there can even be a competing Health Care Directive signed shortly before death that further complicates the problem.

The result: a contentious fight between family members attempting to control the remains and disposition of the decedent’s body.  Who wins and who loses?  That’s up for the Court to decide.   What started as a fight during Kasem’s lifetime now will be a drawn out Court affair lasting long after he is gone.  So much for resting in peace.

A Fight from Start to Finish: How a California Trust can go from bad to worse…and then to Court

Posted in Trustee Breach of Trust, Trustee Removal, Trusts

There’s Trusts that run smoothly, there’s Trusts that have a few problems, and then there’s Trust where everything is a fight from start to finish.  Which Trust sounds most like yours?

  1. Smooth Sailing.  This is the way Trusts are supposed to work.  The successor Trustee takes over management of the Trust, the assets are collected and inventoried, assets are sold as needed, bills are paid, beneficiaries receive their fair share, and the Trusteereports his actions with an accounting.  If there is a continuing Trust for a beneficiary, then the assets are properly invested using a financial planner and an investor policy statement to be sure investments are appropriate.  And the Trust administration is complete, without Court intervention.
  2. Houston we have a problem.  The troubled trust administration is where a Trust has a few problems along the way, but nothing serious enough to force anyone into Court.  Maybe the Trustee needs a gentle reminder on what to do.  Maybe a beneficiary is being unreasonable, or a piece of Trust property is particularly hard to sell.  Whatever the problem, a few arguments back and forth, some slight corrections, and the Trust administration is back on track.  All’s well that ends well.
  3. All-out Warfare.  This is where a Trust administration goes completely off-the-rails.  A bad Trustee who refuses to follow the Trust terms, refuses to communicate and refuses to make mandated Trust distributions. Or Trust investments that are not planned out and are not appropriate for the Trust, or a Trustee who fails to account.  Any one of these scenarios can end up with the whole mess in Court, for a judge to decide.

Notice something about the last approach?  All the examples involve Trustee misconduct because the Trustee is the ONLY person who owes duties to the beneficiaries.  The beneficiaries, in turn, owe no duties to the Trustee.

Unfortunately, even though the Trustee’s duties are well outlined in the California Probate Code, when a Trustee fails or refuses to follow the rules, only a Court can make them behave.  There is no action a beneficiary can take, besides making demands, to force a Trustee’s hand other than seeking a Court order.  Once in Court, the judge can issue an order and force the Trustee to act.  Or the judge can remove the trustee, personally fine the Trustee, or any number of other actions to force compliance with the California Probate Code.

If you find yourself a beneficiary of Trust scenario number 3, you had better be prepared to fight for your rights.

3491 Concours Street, Suite 201
Ontario, CA 91764
909.466.1711 phone
909.354.3460 fax
http://www.aldavlaw.com/practice-areas/litigation/abused-estate-and-trust-beneficiary-litigation/

The Hand Beyond the Grave: The Trick to Transferring Assets Into a Trust After Death

Posted in Videos

Usually, if an asset is not held in the name of a Trust, then the Trust cannot control it.  But in some instances, assets can be transferred into a Trust, and thereby avoid probate, after death.  This is a huge time–and money–saver for everyone involved.

For our email subscribers, please click on the title link to view the video on our website.

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